ACCC to use Jardin against Metcash

The Australian Competition and Consumer Commission will use evidence from a former chief executive of Franklins and a former head of
Metcash
’s IGA distribution business to try to prove its case against the two companies.

The ACCC wants to block grocery wholesaler Metcash from acquiring Franklins, which is owned by South Africa’s largest retailer, Pick n Pay.

It has claimed that the $215 million deal is likely to result in a substantial lessening of competition by removing Metcash’s “closest and only genuine competitor" in the wholesale supply of packaged groceries to independent retailers in NSW.

The ACCC applied to the Federal Court in December for an injunction to stop the sale going ahead in defiance of the regulator.

The ACCC has also experienced ­difficulties with other witnesses it intends to call, it emerged in court last week.

The hearing is set to begin on March 14, but the ACCC has not yet served sworn evidence on ­Metcash and Pick n Pay.

Lawyers for the regulator told the court last week that some witnesses – including the owners of some Franklins stores –had been reluctant to swear written statements, and it might be necessary to issue ­subpoenas.

John Halley SC, for the ACCC, ­conceded that this was “unsatisfactory" and said it would make “eminent good sense" for evidence to be sworn before the trial.

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Lawyers have said there is little incentive for Franklins franchisees to spend time and effort preparing a sworn statement when they have ­difficult businesses to run.

But Judge Arthur Emmett told the ACCC to serve subpoenas on all witnesses who were hesitant to comply. He remarked that it was a “disadvantage that citizens have to comply with the rule of law".

Any witnesses who do not agree to swear an affidavit will front court this week under the subpoena.

Mr Halley also told the court that
Lou Jardin
, the former head of Metcash’s IGA business, has given “detailed ­evidence" to the commission about the “motive and strategy as to why ­[Metcash] implemented ­certain steps."

“That may well be very contentious," he said, before Metcash’s lawyer remarked that Mr Jardin had given evidence about financial information from “my client’s documents that he still holds".

Mr Jardin ran Metcash’s IGA distribution for 10 years until last February, when he was forced to step down after a falling out with Metcash chief executive
Andrew Reitzer
.

Metcash dragged Mr Jardin through the courts for four months to try to prevent him joining competitor SPAR and poaching its customers.

He is now managing director of SPAR. One issue in his case against Metcash had been whether he had access to confidential information.